Tahoe Resources explores, develops, and operates mines in the Americas. The Company primarily produces copper, gold, silver, lead/zinc, and natural gas and petroleum. Very simply, Tahoe is part of the hottest sector so far this year which is the Juniors Gold Mining Sector (GDXJ).
I’m always intrigued by huge bases from stocks that are trading near their 52-week low. Normally a prolonged period of contraction leads to a prolonged period of expansion. Tahoe Resources traded between $7.45 to $9.85 for about 9 months, it broke $9.85 to the upside and immediately tacked on a 16% gain in 2 days. Since then pulled back, retested the 9-month breakout and so far it is bouncing off it. This type action is very constructive and it gives you an opportunity to get in with a very good risk reward ratio.
Prior to Tahoe’s 9-months of sideways action, the stock was in serious downtrend along with the entire gold mining sector, the sellers were in a control. As it started to base, the buyers and the sellers started to find equilibrium, by the beginning of the year the buyers started to take control, every pullback was being bought aggressively. A pattern of higher lows ensued, which is exactly what you see right before a stock with this type of basing pattern does before it exits the base and makes a big move.